The Irish economy in the 2020s

Since 2019 the growth in national income in Ireland has been impressive, averaging almost 5 per cent a year. We investigate the drivers of this growth and the extent to which growth is translating into higher standards of living for those living in Ireland.

Net national income (NNI) is preferred as an estimate of the income available to those living in Ireland. Unlike modified gross national income (GNI*), it excludes the capital used up in producing Ireland’s national income – depreciation.1 In addition, our approach allows for national income to be split out, both by sector and into the contributions from the domestic and foreign sectors of the economy.

We also isolate the impact of windfall corporation taxes on growth in national income over the past decade. Average annual growth in national income would have been one percentage point lower in the period since 2019 without windfall corporation taxes. Much of the apparent shift in the structure of the economy towards the foreign sector is also explained by windfall corporation tax receipts. The domestic productive sector shows up as playing a larger role in recent growth when windfall corporation tax receipts are removed.

This contribution extends the focus on windfall corporation tax receipts beyond their impact on the public finances. In particular, they are shown to materially affect both the share of national income coming from foreign sectors and the overall growth rate of the economy in the 2020s.